Dangerously Small Talk

CHRISTOPHER OGDENTo the list of things broken in Japan, including political will and the banking system, add the limousine of Defense Minister Fukushiro Nukaga. He was arriving at the Pentagon last week to meet his American counterpart William Cohen when a meter-high, steel anti-terrorist barricade unexpectedly popped up and smashed into the underside of his car, leaving it perched atop the barrier, windshield shattered and fenders crumpled.Full of symbolism, the accident in Washington took place just 24 hours before Prime Minister Keizo Obuchi and President Bill Clinton held their first meeting in New York. Nukaga was taken by ambulance to a hospital, treated for cuts and bruises and released. Obuchi was not in the car, but it was he, of course, who sustained the more serious injuries.No, Clinton didn't mug him. The President was busy acting presidential while America picked through the four hours of his videotaped grand jury testimony and thousands of pages of supporting documents in the Monica Lewinsky scandal released the day before, just as Nukaga had his run-in with a U.S. non-trade barrier. In the delicate minuet of the leaders' meeting, the grace notes were in tune: the planned quarter-hour went to 45 minutes; they called each other Keizo and Bill; Obuchi's joke that he had once been described as cold pizza was met by Clinton's truthful riposte that he loved the same; and the Prime Minister was duly invited to visit Washington, a trip that predecessor Ryutaro Hashimoto had to cancel when he lost office in July.It's a shame that outside of the Imperial Household Agency such banalities are not worth a plugged yen. In fact, the Obuchi-Clinton meeting was a bust. It's just as well that the Prime Minister had come to visit the United Nations. Had he been in the United States solely to see the President, the trip would not have been worth the jet fuel. Sure, it's always important to know personally the leader of an important ally, especially one with the world's second largest economy. But few in Washington expect Obuchi to be in office long enough to collect on his official invitation. He was already the sixth Japanese Prime Minister Clinton has met and, for all the President's problems in holding his own office, it's more likely he'll be meeting a seventh before long.PAGE 1 |

Clinton made the usual pleadings that Japan act quickly to strengthen its economy and banking system, but he and Treasury Secretary Robert Rubin have been beating that drum for years--with scant results. This time was no different. From the body language and what was not said, the American side concluded that Obuchi has neither the inclination nor the clout to stimulate further the nation's economy, to infuse Japan's undernourished banking system with public money or to liquidate the assets of failed banks, as the U.S. did a decade ago to stem its savings and loan crisis.Among top U.S. officials, there is a consensus that Japan's problem is political, not economic. Japan is not broke, like Russia. It has $9 trillion in public savings. It does not need international funds, from the International Monetary Fund, the U.S. or anyone. It does not have an exchange-rate crisis with dollars or deutsche marks. Their problem is a corroding banking system, Federal Reserve Chairman Alan Greenspan told the House Banking Committee shortly before Obuchi's visit. What they need, as they fully understand, is to effectively clean out the non-performing loans and replace them with taxpayer funds. You get to a certain point where there's no alternative.Particularly troubling is that while policy coordination between the U.S. and Japan is imperative, anxiety over the state of the economy and what is seen in Japan as excessive meddling from Washington has eroded trust between the two governments. This was not helped when Clinton visited China in July, criticized Japanese economic policy while there and then did not stop in Tokyo. On other important security issues, such as Russia's political and economic woes and nuclear tests by India and Pakistan, there has been little policy coordination, although much of the blame should be borne by a Lewinsky-distracted White House.Where Tokyo and Washington have been speaking--on Korea, for example--their positions are far apart. The U.S. agreement with North Korea was to speed delivery of fuel, food and a light-water reactor, yet Japan seems determined to slow the process. Pyongyang's Aug. 31 firing of a rocket near Japan only adds to the urgency for convergence. The launch invigorated arguments for and against a theater missile defense system, a consideration China opposes with the intensity Russia brought to bear against Ronald Reagan's Star Wars missile defense. That subject needs extensive airing, as does the future of U.S. troops on Okinawa.None of these bilateral issues will be resolved without trust and a greater sense of mutual purpose. Unfortunately, Japan's banking crisis slammed them with the force of a steel barricade. The Pentagon's barrier was eventually lowered and Nukaga's limo was carted off for repair. Which is what Tokyo's bank policy needs, but shows no sign of getting. | PAGE 2